Finder Energy Locks in Rig for KTJ Drilling as FID Decision Nears
Key Takeaways
- Finder has contracted ENEOS Drilling's Hakuryu-5 for three firm KTJ development wells, with options on two more and drilling set to start from 1 December 2027.
- The estimated cost is US$42.3 million gross for a roughly 150-day programme, with a 140-day minimum commitment, and Finder's own share is not disclosed.
- The contract is conditional on JV, government and board approvals by 31 December 2026, ENEOS approvals by 16 November 2026, and a satisfactory site survey.
- Finder plans to fund its share mainly through project debt being arranged with Barrenjoey DCM, including support for its portion of US$19.3 million in bank guarantees.
- FID is still targeted for 30 November 2026, with long lead items from Sumitomo, OneSubsea and SLB already secured.
Hakuryu-5 rig contract executed for KTJ development drilling
Rig availability is often the quiet bottleneck in offshore projects, and Finder Energy (ASX:FDR) has now addressed it. The company has executed a contract with ENEOS Drilling Limited for the Hakuryu-5 semi-submersible drilling unit, associated equipment and personnel, covering the KTJ development drilling campaign offshore Timor-Leste.
The headline terms, as set out in the 15 October 2026 announcement:
- Three firm development wells
- Options for two additional wells
- Drilling scheduled to commence from 1 December 2027
- Approximately 150 days estimated to drill and complete the wells
Finder says the contract provides for competitive market rates and aligns with its budget expectations for the development drilling program. Rig timing is a critical-path item, so locking it in gives the market clearer visibility on the KTJ schedule ahead of a Final Investment Decision (FID), the point at which partners formally commit to developing a discovery.
Damon Neaves, CEO
“Securing the Hakuryu-5 is a major milestone for the KTJ Project which brings us a step closer to FID and providing clear visibility on the timing of the development drilling program.”
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Contract terms and conditions investors should know
Key terms at a glance
The Annexure to the announcement summarises the material terms. The table below pulls out the figures most relevant to investors.
| Term | Detail | Why it matters |
|---|---|---|
| Firm commitment | Three development wells, minimum contractual commitment of 140 days | Sets the minimum period Finder is committed to under the contract |
| Commencement window | 1 December 2027 to 15 March 2028, subject to satisfaction of contractual commencement requirements | Defines when drilling is expected to begin |
| Contract value | Approximately US$42.3 million (gross Joint Venture cost), based on an estimated 150-day programme | Final amount depends on actual duration of operations and applicable contractual rates |
| Financial security | Staged bank guarantees totalling US$19.3 million (gross) | Secures payment obligations under the contract |
| Optional wells | Two additional wells on the same terms and conditions, exercisable by written notice no later than the commencement date | Adds flexibility without a firm commitment |
The US$42.3 million is a gross Joint Venture figure, not Finder’s share. The announcement does not disclose Finder’s share.
Finder expects to fund its share of these costs primarily through project debt financing arrangements currently being progressed with the assistance of Barrenjoey DCM. Its share of the bank guarantees is expected to be supported by a facility forming part of the debt package.
Conditions to be satisfied
The contract is conditional. That means it only becomes effective once several boxes are ticked:
- Required KTJ Joint Venture, government and Finder board approvals by 31 December 2026.
- ENEOS parent company and board approvals by 16 November 2026.
- A site survey, to be undertaken by Finder, supporting the final mooring and marine riser assessment. If additional mooring equipment is identified as necessary and the parties cannot agree the allocation of associated costs, either party may terminate the contract without liability for costs.
The contract also contains customary termination rights, including termination for convenience by Finder, material default and prolonged force majeure. Where Finder terminates for convenience, early termination payments are calculated by reference to the agreed standby day rate for the remaining minimum commitment period, with mitigation to the extent ENEOS secures alternative employment for the rig.
How drilling rigs and long lead items drive project readiness
A semi-submersible rig is a floating offshore drilling platform used to drill and complete wells. In this case, the 150-day program includes running completion assemblies and installing the wellheads and Christmas Trees, the equipment that sits on top of a well and controls flow, ready for hook-up to the Petrojarl I FPSO (floating production, storage and offloading vessel).
Why does this matter before FID? Rigs and specialised equipment are scheduled well ahead, so securing them early gives the project a clearer path. Finder says the rig, together with long lead equipment and key services, demonstrates the project’s progression towards execution readiness and positions the Joint Venture to transition into the execution phase following FID.
Long lead equipment and services already secured
Finder says it has already secured the following critical-path items and services:
- Sumitomo: manufacture, supply and delivery of Oil Country Tubular Goods (OCTG), including casing, production liner and completion tubing.
- OneSubsea: three Christmas Trees under fabrication.
- Wellheads: acquired from another joint venture following inspection to confirm their suitability.
- AGR: integrated drilling management services, with Finder retaining overall responsibility as Operator.
- SLB: upper completion equipment for the development wells.
Why the Hakuryu-5 and ENEOS Drilling
According to Mr Neaves, the Hakuryu-5 and her crew have an excellent safety and performance record with extensive operating experience in Southeast Asia, including drilling campaigns for major operators such as PETRONAS and INPEX.
ENEOS Drilling Limited is a Japanese offshore drilling contractor and wholly owned subsidiary of ENEOS Xplora Inc., part of the ENEOS Group. Established in 2024, it draws on the experience of Japan Drilling Co., Ltd. (JDC), established in 1968, and operates a fleet of six offshore drilling rigs.
The award followed a tendering, evaluation and negotiation process. It included a rig inspection in Labuan, Malaysia involving representatives of TIMOR GAP, as well as ENEOS representatives visiting Dili, Timor-Leste to evaluate in-country logistics support and local content.
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Path to FID and what the option wells could unlock
The rig contract builds on progress across the KTJ Project, but FID has not yet been reached. Finder is targeting FID by 30 November 2026, with remaining workstreams including satisfying each partner’s investment criteria, obtaining Joint Venture and regulatory approvals, and finalising remaining major project agreements and financing arrangements.
The KTJ FID deadline extension to 30 November 2026 gave Finder additional time to run EPCI negotiations, Barrenjoey-led debt financing and final rig approvals in parallel, which is the backdrop to this contract now being executed.
The two optional well slots add flexibility. According to the announcement, they could accommodate participation by other operators, creating opportunities for cost and operational synergies, or allow exploration or appraisal drilling targeting potential tie-back opportunities within PSC 19-11.
For Timor-Leste, Finder says the KTJ Project has the potential to contribute to future petroleum revenues, support local employment and contracting opportunities, and strengthen the country’s offshore petroleum industry. Finder’s Joint Venture partner is TIMOR GAP.
For investors, the takeaway is that a major scheduling item is now contracted, though the conditions above and the FID decision still sit ahead. Mr Neaves closed with a forward look:
Damon Neaves, CEO
“We look forward to spudding the first of the three firm development wells late next year.”
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